Table of Contents
Introduction
Investors and traders are hoping to capitalize on the potential of decentralized finance, also known as DeFi, to disrupt the existing financial system. This has caused decentralized finance to emerging as one of the hottest topics in the blockchain world. Decentralized financial infrastructure (DeFi) systems provide users the opportunity to lend, borrow, trade, and stake cryptocurrencies without having to depend on middlemen such as banks or brokers.
Unfortunately, the fast rise of the market for decentralized finance has also led to the creation of fraudulent schemes that prey on investors who are unaware that they are being taken advantage of. One such plan is known as DeFiNatics, and it is a Ponzi scheme based on smart contracts. This fraud has caused worry among members of the DeFi community.
What exactly is DeFiNatics, then?
A decentralized application (dApp) called DeFiNatics has been constructed on the Binance Smart Chain (BSC), and it makes guarantee investors that they would get a significant return on their investments. On its website, DeFiNatics presents itself as a decentralized autonomous organization (DAO) that is run by a community of token holders as its governing body. The platform claims that it can create profits via the use of a bespoke algorithm that invests in a variety of decentralized finance protocols and tokens.
On the other hand, it becomes abundantly evident that DeFiNatics is nothing more than a conventional Ponzi scam the more closely one looks at it. A smart contract is used on the platform to automate the process of awarding incentives to investors. These awards are supported by the investments made by new users. The rewards that DeFiNatics has promised are impossible to achieve and can only be reached by continuously attracting new investors.
How exactly does DeFiNatics conduct its job?
DeFiNatics is able to do its business because it issues a token known as FIN. Users have the ability to acquire FIN by transferring Binance Coin (BNB) to the address of the DeFiNatics smart contract. The user’s wallet will then be credited with a certain number of FIN tokens, the exact amount of which is determined by the current price of FIN and is minted by the smart contract.
After making a purchase of FIN, a user has the ability to stake their tokens in any of the pools that are made accessible on the DeFiNatics platform. The returns that may be earned from these pools range from low to large, with the latter requiring users to invest a greater quantity of FIN tokens. Users have the opportunity to earn extra incentives just by inviting their friends to utilize the site.
The FIN tokens that users earn as incentives may be withdrawn at any moment and are paid out in the form of FIN tokens. Nevertheless, in order for users to be able to redeem their prizes, they must first unstake any FIN tokens that they have and then wait for a certain amount of time before they may withdraw their earnings.
Caution Signals with Flashing Red Flags
Despite the fact that DeFiNatics asserts that it is a genuine DeFi platform, there are a number of red flags and warning indications that point to the company being a Ponzi scam disguised as a smart contract.
Unsustainable returns
Users may expect substantial profits on their investments with DeFiNatics, with some pools giving returns of up to 600% each year. Nevertheless, high returns cannot be maintained and can only be achieved by continuously attracting new investors. As is the case with all Ponzi schemes, the profits that have been promised by DeFiNatics will ultimately become unsustainable, which will result in the scheme coming to an end.
Absence of openness and honesty
Very little information is provided by DeFiNatics on its staff, its investment strategy, or the manner in which it creates profits for investors. There is no evidence to show that the platform is administered by a community of token holders; yet, the platform claims that it is a decentralized autonomous organization (DAO). The platform’s lack of openness is a red flag, indicating that there is a possibility that it is not functioning in a genuine manner.
There is no audited digital contract.
The smart contract used by DeFiNatics has not been checked for accuracy by a qualified third-party auditor. This indicates that there is no guarantee that the smart contract will be secure or that the user’s cash will be safeguarded. This should immediately raise a significant red flag given the past history of smart-contract flaws and hacks in the DeFi domain.
Tokenomic practices that do not exist
There are no genuine tokenomics implemented in DeFiNatics. The only true purpose that the FIN token serves is to facilitate the generation of incentives for users who stake their tokens.
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